Fund Management

Last month there was news about the hedge fund Amaranth lost 6 billion US dollars. The lead trader of the company once won a few millions by betting on natural gas to rise last year, lost half the capital this year resulting in the coming cut off of 60% employees, by using the same strategy betting on the same natural gas to rise for predicting more hurricane comes. However, as Mr. Tso from Hong Kong Economic Journal said that no one can guess about weather, fewer hurricane came this year and the price dropped a lot.

The lead trader had the responsibility about the trade because he bet on the risk of the whole fund. But the management team of the fund should have much more responsiblity on the loss because they trusted a 'once star' and allowed a guy to be able to loss more than half of the capital! Where is the risk management department of such a big fund (having 9.5 billion dollars in capial in the beginning of this year)?!

Richard Li Sells PCCW Assets

In Aug 2000, Singapore Telecom wanted to buy HK Telecom from Cable & Wireless, however, China showed the great concern of the biggest telecommunications company in Hong Kong should not be owned by foreign investors. That was the reason why PCCW, as a Hong Kong based company, could finally acquire HK Telecom, even the assets of PCCW was not sufficient to swallow such a big company at that time. This acquisition caused PCCW to be debt-ridden and its stock price was down 96% from its 2000 peak value. Richard Li was admired by the Chinese authorities, but cursed by its stockholders.

Now, Richard Li wants to sell HK Telecom to foreign investors at a much higher price. For business point of view, to sell a product/service for a good price is out of questions. However, telecommunications business belongs to military strategic resource and China must eager to get control of this biggest telecommunications company. Even in the so-called democratic country like America, acquisition of big business such as IBM PC computer, harbours, logistic business would also be blocked, prevented by the partiament of the nation!

While Richard Li's action of selling the telecommunication business shows no responsibility to the society, just want to get rid of his notorious business, take the money out and run away. Chinese do business to those with trust and relationship. His action will definitely harm his future business with Chinese govenment and Chinese firms.